Simplified Issue Life Insurance Facts

Simplified Issue life insurance can be obtained without a medical exam, but there are some health questions. The number of questions depends on the company and plan. The following are some additional simplified issue life insurance facts:

1. The policy may have a deferred benefit or an immediate death benefit. Simplified Issue policies that have fewer health questions generally come with a deferred benefit, meaning the death benefit will be limited to a return-of-premium plus interest in the first two policy years. Simplified Issue plans that have more questions are usually available with an immediate death benefit.

2. Coverage can be available on a term or permanent basis. Term policies have premiums level for a stated term, and the coverage either expires or the premiums increase after that term. Permanent policies have level premiums and coverage for life.

3. Coverage on a permanent simplified issue policy is available on a Life Pay or Limited Pay basis. Life Pay policies have premiums payable for life. Limited Pay policies can be paid up in a limited number of years. The most common type of Limited Pay is paid-up in 20 years — meaning no more payments are made after 20 years, but you are still covered after the 20th year.

4. The death benefit is generally tax-free.

5. The policy owner can choose her own beneficiary. The beneficiary must have an insurable interest, like a spouse, child, or business associate.